C-Innovation, LLC v. Trendsetter Engineering, Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

C-INNOVATION, LLC CIVIL ACTION

VERSUS NO. 20-2631

TRENDSETTER ENGINEERING, INC. SECTION M (1)

ORDER & REASONS

Before the Court is the motion of defendant Trendsetter Engineering, Inc. (“Trendsetter”)

to dismiss for lack of personal jurisdiction and/or case or controversy.1 Plaintiff C-Innovation,

LLC (“C-Innovation”) responds in opposition,2 and Trendsetter replies in further support of its

motion.3 Having considered the parties’ memoranda, the record, and the applicable law, the Court

issues this Order & Reasons denying the motion.

I. BACKGROUND

This case involves a patent dispute over a process to unclog subsea flow lines. In oil-and-

gas production, subsea flow lines transport oil and gas from production wells. Sometimes these

pipes get clogged with solid bodies known as hydrates. Hydrate remediation is the process by

which this backup is cleared so the oil and gas can continue to flow. Essentially, this case revolves

around which company invented a new method to unclog the pipes and whether the companies are

even using the same method.

1 R. Doc. 11.

2 R. Doc. 16.

3 R. Doc. 20. On December 3, 2020, C-Innovation filed an amended complaint. R. Doc. 14. Trendsetter

filed an additional motion to dismiss reasserting its arguments to apply them to the amended complaint. R. Doc. 21.

C-Innovation opposed by incorporating its own previously-briefed arguments. R. Doc. 22.

Trendsetter is alleged to be a corporation with its headquarters and principal place of

business in Texas that occasionally does work in Louisiana.4 C-Innovation is alleged to be a

company headquartered in Mandeville, Louisiana.5 Meetings with representatives of Trendsetter

and C-Innovation have taken place in both Texas and Louisiana.6

In November 2015, an oil platform operator hired FMC Technologies Offshore, LLC d/b/a

FTO Services (“FTO Services”), a joint venture affiliated with C-Innovation, to “remediate a

hydrate plug in subsea flow lines in the Gulf of Mexico” (the “2015 Project”).7 The process used

was outlined in a document titled “Operations Procedure.”8 On February 3, 2016, FTO Services

filed International Patent Application No. PCT/US2016/016320 describing and claiming this

process.9 On August 10, 2017, the application was published as international publication No. WO

2017/135941 A1.10 The joint venture was dissolved in August 2016.11 In October 2016, members

of the 2015 Project team presented a paper outlining the method called “Hydrates Remediation:

An Innovative, Simplified Effective and Field Proven Solution” at the Rio Oil & Gas Expo and

Conference in Brazil.12

On August 25, 2016, C-Innovation, Trendsetter, and Halliburton Energy Services, Inc.

(“Halliburton”) entered into a memorandum of understanding to form a coalition “to conduct

subsea hydraulic well intervention … and field inspection, maintenance and repair … operations

4 R. Docs. 11-1 at 8; 11-2 at 4. “While Trendsetter does occasionally meet with clients in Louisiana to

implement services to be performed in federal waters offshore from Louisiana, all contracting, engineering and

management of these operations is conducted in Trendsetter’s facilities in Houston[,] Texas.” R. Doc. 11-1 at 9.

5 R. Doc. 16 at 5.

6 R. Docs. 11-1 at 10; 16 at 14.

7 R. Doc. 14 at 3.

8 R. Docs. 14 at 3; 14-2.

9 R. Doc. 14 at 5.

10 R. Docs. 14 at 5; 14-5.

11 R. Doc. 14 at 5.

12 R. Docs. 14 at 5-6; 14-6.

2

in the Gulf of Mexico.”13 C-Innovation and Halliburton were identified as Louisiana companies.14

C-Innovation would be the prime contractor responsible for leading the marketing effort and

managing onshore and offshore projects.15 Trendsetter would be the subcontractor responsible for

managing subsea equipment and operations, supporting marketing, and providing subsea

engineering and offshore technicians.16 This collaboration set the stage for the patent dispute at

the center of this case.

By Trendsetter’s account, on September 28, 2016, Trendsetter learned that Halliburton was

invited to submit a proposal to LLOG Exploration Company (“LLOG”) on a hydrate-intervention

job.17 Trendsetter completed the actual proposal on October 4, 2016.18 According to Trendsetter,

on October 11, 2016, representatives from C-Innovation, Trendsetter, and Halliburton met with

LLOG to discuss the project.19 Halliburton proposed the hydrate-remediation plan used in the

2015 Project.20 Trendsetter alleges that, after hearing Halliburton’s proposal, Mike Cargol, vice

president of rentals and services at Trendsetter, “proposed a new and different hydrate remediation

process for the LLOG project, which later formed the basis of Trendsetter’s ‘785 Patent.”21 LLOG

agreed to use the newly-developed method and orally awarded the contract to Halliburton on

October 20, 2016.22 Trendsetter began work the next day even though there was no formal, written

contract.23

13 R. Docs. 11-2 at 5 & 9; 16-1 at 2.

14 R. Docs. 11-2 at 12; 16-1 at 2.

15 R. Doc. 11-2 at 10.

16 Id.

17 R. Doc. 11-3 at 2.

18 Id. at 3.

19 R. Doc. 11-2 at 6; 11-3 at 3.

20 R. Doc. 11-3 at 3.

21 R. Doc. 11-2 at 6.

22 R. Doc. 11-2 at 6; 11-3 at 4.

23 R. Doc. 11-2 at 6-7; 11-3 at 4.

3

According to C-Innovation, representatives of C-Innovation, Halliburton, and Trendsetter

met several times from October 2016 through December 11, 2016 “including in Covington,

Mandeville, and Port Fourchon, Louisiana,” to plan and complete two hydrate-remediation

projects.24 C-Innovation alleges that they agreed to use the process employed in the 2015 Project.25

Through these meetings, Kevin Knight, a systems engineer at C-Innovation, who formerly worked

with FTO Services, disclosed details and copies of technical reports and schematic drawings of

the 2015 process to Trendsetter executives and other project team members.26

Around October 28, 2016, C-Innovation alleges that for the first project, it deployed the

Island Performer from Port Fouchon to perform hydrate-remediation operations employing the

process used in the 2015 Project and utilizing support from Trendsetter employees working in

Louisiana.27 From December 2 through 11, 2016, C-Innovation again deployed its vessel from

Port Fouchon to complete the second flow-line project.28 C-Innovation says the process utilized

in the 2015 Project method was used once more.29

On November 11, 2016, Trendsetter filed an application for a provisional patent on what it

claims to be its hydrate-remediation process.30 But C-Innovation alleges that the figures in

Trendsetter’s application appear to mimic the schematic drawings C-Innovation shared during the

2016 meetings in Louisiana.31 On November 9, 2017, Trendsetter filed a non-provisional patent

application, No. 15/808,255.32 The patent was awarded as U.S. Patent No. 10,273,785 B2 (the

24 R. Docs. 14 at 7; 16 at 5; 16-1 at 3.

25 R. Doc. 16-1 at 3.

26 R. Docs. 16-1 at 3; 14-7.

27 R. Doc. 14 at 7.

28 Id. at 7-8.

29 Id. at 8.

30 R. Docs. 11-2 at 7; 14-1.

31 R. Doc. 14 at 8-9.

32 Id. at 9.

4

“’785 Patent”) on April 30, 2019.33 C-Innovation alleges that Trendsetter applied for this patent

using the information C-Innovation provided at the 2016 meetings.34 Trendsetter, however, insists

that it discovered the remediation process described in the ’785 patent on its own.35

In May 2019, C-Innovation was approached by a client to remediate a flow line.36 C-

Innovation planned on using the process from the 2015 Project.37 On May 30 2019, Trendsetter

notified C-Innovation that Trendsetter had received the ’785 Patent.38 On June 24, 2019,

Trendsetter sent a copy of the ’785 Patent to C-Innovation’s prospective client.39 The client

expressed concern to C-Innovation “about what it viewed as an express threat of litigation.”40 And

the client allegedly would not hire C-Innovation for a project in Louisiana unless C-Innovation

obtained a license for the ’785 Patent.41

On July 1, 2019, David Older, the executive vice president of corporate development at

Trendsetter, and David Sheetz, vice president of C-Innovation, met at C-Innovation’s Houston

office to discuss the patent.42 Older attests that “[p]rior to this time, I had not been aware of the

2015 Project nor had I previously seen the documents provided by Mr. Sheetz but informed Mr.

Sheetz that I felt confident that the Trendsetter method was clearly distinct from the FTO Services

method and would survive a validity challenge.”43 C-Innovation asserts that Older, somewhat

33 R. Doc. 11-2 at 7.

34 R. Doc. 16 at 5. C-Innovation has four arguments why the ’785 Patent is invalid: “(1) the method claimed

in the ‘785 Patent was in public use or on sale within the industry before Trendsetter filed its patent application; (2)

Trendsetter misrepresented the identity of the true inventors of the patented method; (3) Trendsetter copied technical

drawings and information disclosed by C-Innovation and held them out as the work product of its employees; and (4)

the patent claims were anticipated and obvious in view of prior art.” Id. at 10.

35 R. Docs. 11-2 at 6; 11-3 at 1.

36 R. Doc. 14 at 11.

37 Id. at 11-12.

38 R. Docs. 11-1 at 10; 11-2 at 7;16 at 6.

39 R. Doc. 14 at 12.

40 Id.

41 R. Doc. 16 at 12.

42 R. Docs. 11-1 at 10; 11-2 at 7; 16 at 12.

43 R. Doc. 11-2 at 7.

5

contradictorily, “refused to concede that the remediation method utilized by C-Innovation did not

infringe the ‘785 Patent.”44 C-Innovation asserts further: “Older stated that Trendsetter needed

assurance that the Trendsetter manifold would be used for C-Innovation’s planned hydrate

remediation process instead of the manifold provided by its competitor. He then demanded that

C-Innovation pay a royalty under a license agreement if it provided the hydrate remediation

process to its client without using Trendsetter’s manifold.”45 As a result of this meeting and

subsequent negotiations, C-Innovation entered into a license agreement (the “License Agreement”)

with Trendsetter to take a non-exclusive license to the ’785 patent.46 The License Agreement

identifies C-Innovation as a Louisiana company,47 and Dino Chouest executed the agreement on

C-Innovation’s behalf from its office in Cut-Off, Louisiana.48 C-Innovation alleges that

Trendsetter used “express and tacit threats of a patent infringement suit” to coerce it into entering

into the License Agreement.49 The hydrate-remediation project requiring the License Agreement

was mobilized from Louisiana.50 C-Innovation, from its Louisiana offices, paid Trendsetter

$124,000 in royalties.51 C-Innovation was the only licensee under the Trendsetter patent, but the

license had to be renewed “on a ‘project’ basis.”52

As a consequence, on July 24, 2020, Sheetz (C-Innovation), with a prospective client in

hand, emailed Older (Trendsetter) asking if the rates and terms of the existing License Agreement

could be continued for a new hydrate-remediation project.53 Older stated the original terms would

44 R. Doc. 16 at 9.

45 Id. at 12 (citations omitted).

46 R. Docs. 11-1 at 10 & 17; 11-2 at 7-8; 14-12.

47 R. Doc. 16 at 7 n.6 (citing R. Doc. 14-12).

48 Id. at 17 n.9.

49 Id. at 5.

50 Id.

51 Id. at 13.

52 R. Docs. 14-12 at 2; 11-1 at 11; 16 at 13.

53 R. Docs. 11-1 at 10-11; 11-2 at 8 & 15.

6

be honored.54 On August 25, 2020, Older requested an update to which Sheetz responded:

“Nothing as of now.”55

When C-Innovation requested a change to the License Agreement to clarify that the license

covered its client, BP, and other contractors, Trendsetter responded that it would need to contract

directly with BP.56 Nicholas Gault, vice president of finance at Trendsetter, subsequently emailed

Sheetz: “David, any additional thoughts on the license agreement? We do not want to inhibit your

upcoming work with BP, so please let us know if you would like us to pursue the license agreement

with BP or if [C-Innovation] will accept that the agreement will cover [C-Innovation], [its]

customer, and [its] subcontractors only.”57 C-Innovation took this to be an express threat of

litigation.58

On September 28, 2020, C-Innovation sent a letter terminating the License Agreement,59

telling Trendsetter “that it intends to move forward with new projects without payment of

royalties.”60 C-Innovation then filed this lawsuit seeking to have the ’785 Patent declared invalid,

unenforceable, and not infringed,61 asserting that it “does not intend to make any substantial

changes to its hydrate remediation process for future projects.”62 Thereafter, Trendsetter offered

to C-Innovation a covenant-not-to-sue agreement.63

54 R. Docs. 11-1 at 11; 11-2 at 8 & 14.

55 R. Doc. 11-2 at 8 & 14.

56 R. Doc. 16 at 12-13.

57 R. Doc. 16-1 at 8.

58 R. Doc. 16 at 13.

59 R. Docs. 11-1 at 11; 14-13.

60 R. Doc. 14 at 13.

61 R. Doc. 1

62 R. Doc. 14 at 14.

63 R. Doc. 17-3.

7

II. PENDING MOTION

Trendsetter urges that this case be dismissed for lack of personal jurisdiction.64 It argues

that this Court cannot exercise specific personal jurisdiction over it because, as a Texas company

that interacted with C-Innovation in Texas, Trendsetter has insufficient contacts with Louisiana.65

Trendsetter’s vice president attests that he is “not aware of any occasion in which any Trendsetter

employee visited the State of Louisiana for any activities relating to licensure or enforcement of

the ‘785 Patent.”66 Trendsetter argues further that general jurisdiction would be inappropriate

because it is not “at home” in Louisiana.67 In the alternative, Trendsetter argues that, under the

standards of the Declaratory Judgment Act, the case should be dismissed for lack of a case or

controversy.68 Trendsetter asserts that discretionary dismissal is warranted here because C-

Innovation has engaged in forum-shopping by choosing to file suit in Louisiana.69 C-Innovation

opposes the motion, arguing that personal jurisdiction is appropriate because its claims arise out

of Trendsetter’s actions in Louisiana.70 Additionally, C-Innovation argues that a controversy

exists between the parties because Trendsetter has expressly and impliedly threatened litigation to

enforce its patent and has interfered with C-Innovation’s business.71

III. LAW & ANALYSIS

“As a general rule, when the court is confronted by a motion raising a combination of Rule

12(b) defenses, it will pass on the jurisdictional issues before considering whether a claim was

64 R. Doc. 11-1 at 16-20.

65 Id. at 16-17.

66 R. Doc. 11-2 at 8.

67 Id. at 17-19.

68 Id. at 23-24.

69 Id. at 24-25.

70 R. Doc. 16 at 14-22.

71 Id. at 22-29.

8

stated by the complaint.” 5B CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE

AND PROCEDURE § 1351 (3d ed. 2004). Therefore, the Court will first consider whether it has

personal jurisdiction over Trendsetter.

A. Personal Jurisdiction

1. Rule 12(b)(2) standard

Federal Rule of Civil Procedure 12(b)(2) confers a right to dismissal of claims against a

defendant where personal jurisdiction is lacking. Personal jurisdiction is “an essential element of

the jurisdiction of a district court, without which the court is powerless to proceed to an

adjudication.” Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999) (internal quotation

marks and alteration omitted). Because “the issue [of personal jurisdiction] ‘is intimately involved

with the substance of the patent laws,’” this Court must look to the law of the Federal Circuit.

Genetic Veterinary Scis., Inc. v. LABOKLIN GmbH & Co. KG, 933 F.3d 1302, 1309 (Fed. Cir.

2019) (applying Federal Circuit law to determination of personal jurisdiction over out-of-state

defendant-patentee in patent-infringement and declaratory-judgment action) (quoting Grober v.

Mako Prods. Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012)). A federal court may exercise personal

jurisdiction over a non-resident defendant if (1) the forum state’s long-arm statute confers personal

jurisdiction over the defendant, and (2) the exercise of personal jurisdiction comports with due

process under the United States Constitution. Breckenridge Pharm., Inc. v. Metabolite Labs., Inc.,

444 F.3d 1356, 1361 (Fed. Cir. 2006). “Because Louisiana’s long-arm statute extends to the limits

of due process, the two inquiries collapse into a single inquiry: whether exercise of personal

jurisdiction comports with due process.” Hockerson-Halberstadt, Inc. v. Propet USA, Inc., 62 F.

App’x 322, 336 (Fed. Cir. 2003) (citations omitted). “Thus, the sole question here is whether the

9

exercise of jurisdiction would be consistent with due process.” Maxchief Invs. Ltd. v. Wok & Pan,

Ind., Inc., 909 F.3d 1134, 1137 (Fed. Cir. 2018).

An individual’s liberty interest is protected by federal due process through the requirement

that individuals have “fair warning that a particular activity may subject [them] to the jurisdiction

of a foreign sovereign.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quoting

Shaffer v. Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring)). For purposes of personal

jurisdiction, the due-process inquiry determines whether the defendant has purposefully availed

itself of the benefits and protections of the forum state through “minimum contacts” with the

forum, and whether the exercise of jurisdiction over the defendant “does not offend traditional

notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316

(1945). “[P]ersonal jurisdiction ‘is not susceptible of mechanical application.’” Jack Henry &

Assocs., Inc. v. Plano Encryption Techs. LLC, 910 F.3d 1199, 1205 (Fed. Cir. 2018) (quoting Kulko

v. Superior Ct., 436 U.S. 84, 92 (1978)).

Personal jurisdiction may be general or specific. Goodyear Dunlop Tires Operations, S.A.

v. Brown, 564 U.S. 915, 919 (2011). For a court to exercise general jurisdiction, the defendant’s

contacts with the forum must be “so continuous and systematic” as to render the defendant “at

home” in the forum state. Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (citing Goodyear,

564 U.S. at 919). In analyzing specific jurisdiction, the Federal Circuit employs a three-prong test

in which it determines whether “(1) the defendant purposefully directed its activities at residents

of the forum, (2) the claim arises out of or relates to those activities, and (3) assertion of personal

jurisdiction is reasonable and fair.” Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324,

1332 (Fed. Cir. 2008) (quoting Breckenridge, 444 F.3d at 1363). After the plaintiff establishes the

first two factors, which correspond with the “minimum contacts” prong of International Shoe, the

10

burden shifts to the defendant to demonstrate that an exercise of personal jurisdiction would be

unfair or unreasonable. Burger King, 471 U.S. at 477 (citing World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 292 (1980)); see also Xilinx, Inc. v. Papst Licensing GmbH & Co. KG,

848 F.3d 1346, 1354-55 (Fed. Cir. 2017) (“‘Our personal jurisdiction precedents call for a two-

part analysis. The contacts prong asks whether the defendant has sufficient contacts with the forum

State to support personal jurisdiction; the reasonableness prong asks whether the exercise of

jurisdiction would be unreasonable under the circumstances.’”) (quoting Daimler, 571 U.S. at 144

(Sotomayor, J., concurring)). In determining reasonableness, a court considers “the burden on the

defendant, the interests of the forum State, and the plaintiff’s interest in obtaining relief,” Asahi

Metal Indus. Co. v. Super. Ct., 480 U.S. 102, 113 (1987), as well as “the interstate judicial system’s

interest in obtaining the most efficient resolution of controversies; and the shared interest of the

several States in furthering fundamental substantive social policies.” World-Wide Volkswagen,

444 U.S. at 292.

“Where the district court’s disposition as to personal jurisdiction is based on affidavits and

other written materials in the absence of an evidentiary hearing, a plaintiff need only make a prima

facie showing that defendants are subject to personal jurisdiction.” Genetic Veterinary Scis., 933

F.3d at 1309. The court must “‘accept the uncontroverted allegations in the plaintiff’s complaint

as true and resolve any factual conflicts in the affidavits in the plaintiff’s favor.’” Xilinx, 848 F.3d

at 1352 (quoting Avocent, 552 F.3d at 1329).

11

2. Analysis

a. Trendsetter has sufficient minimum contacts with Louisiana to support

specific personal jurisdiction.

First, the Court must consider whether Trendsetter has sufficient contacts with the forum

state to support personal jurisdiction. In declaratory-judgment actions for noninfringement or

invalidity, a “claim arises out of the patentee’s contacts with the forum state only if those contacts

‘relate in some material way to the enforcement or the defense of the patent.’” Maxchief, 909 F.3d

at 1138 (quoting Avocent, 552 F.3d at 1336). Enforcement letters are relevant contacts to establish

specific personal jurisdiction. “In the context of declaratory judgment actions involving assertions

of patent noninfringement or invalidity, [the Federal Circuit has] concluded that cease-and-desist

letters sent by the patentee defendant into the forum are relevant contacts in the personal

jurisdiction analysis.” Xilinx, 848 F.3d at 1354. “Minimum contacts may be established by ‘the

threat of an infringement suit, as communicated in a cease-and-desist letter.’” Id.; see also New

World Int’l, Inc. v. Ford Global Techs., LLC, 859 F.3d 1032, 1037 (Fed. Cir. 2017) (“This court

has acknowledged that the defendant purposefully directs his activities at residents of the forum

when the defendant sends a cease and desist letter to a potential plaintiff in that particular forum.”).

Minimum contacts also can be established by a variety of other enforcement-related

activities. See, e.g., Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1351 (Fed. Cir. 2003)

(holding there was specific jurisdiction over the defendant-patentee who hired a lawyer in the

forum state, made phone calls into the state regarding the subject matter of the technology covered

by the patent, and whose employees visited the plaintiff-company’s facility in the forum state);

Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1362 (Fed. Cir. 2001) (holding there was specific

jurisdiction over defendant-patent-holder who sent an infringement letter to the forum state and

12

who negotiated a license agreement by phone calls and emails directed to the forum state even

though he did not physically go there). Most importantly, for our purposes, the Federal Circuit

has upheld specific jurisdiction when “the defendants took steps to interfere with the plaintiff’s

business by enlisting a third party to take action against the plaintiff.” Campbell Pet Co. v. Miale,

542 F.3d 879, 888 (Fed. Cir. 2008).

Here, in connection with a project to deploy from Louisiana, Trendsetter sent notices to

both C-Innovation and its client advising them of the ’785 Patent. C-Innovation characterizes the

notices as enforcement letters; Trendsetter disagrees. C-Innovation’s client allegedly concluded

that the notice was an enforcement action, construing it as threatening litigation. Regardless, there

is no definitive allegation in the complaint, or showing in the record before the Court, that the

communications were directed to Louisiana, so they themselves cannot constitute the requisite

minimum contacts. However, the communications must be considered in the context of

Trendsetter’s overall objective for its enforcement-related activities. The notices advised both C-

Innovation and its client of Trendsetter’s patent for the purpose of influencing their decisions about

moving forward with the Louisiana project. As alleged in the complaint, Trendsetter’s business

goal was to extract a license agreement from C-Innovation, a Louisiana company, to use the

process covered by the ’785 Patent in connection with its client’s project deploying from

Louisiana. C-Innovation thus claims that Trendsetter’s actions, taken together, amount to

interference with C-Innovation’s business in Louisiana by enlisting the third-party client to

pressure C-Innovation to obtain a license for the process from Trendsetter. See Campbell Pet, 542

F.3d at 888. The result of these communications, then, was that C-Innovation and Trendsetter

entered into the License Agreement that was executed by Chouest on behalf of C-Innovation at its

13

Louisiana office and permitted C-Innovation and its client to use the patent for a project mobilized

from Louisiana.

Typically, license agreements on their own are not enough to establish minimum contacts.

“[O]ur case law requires that the license agreement contemplate a relationship beyond royalty or

cross-licensing payment, such as granting both parties the right to litigate infringement cases or

granting the licensor the right to exercise control over the licensee’s sales or marketing activities.”

Breckenridge, 444 F.3d at 1366. The License Agreement in this case effectively forged an ongoing

relationship between the parties by requiring C-Innovation “to request approval from Trendsetter

to move forward with each prospective project.”72 The terms of the agreement then required

Trendsetter to notify C-Innovation at its office in Mandeville, Louisiana, whether it would grant

the license for the requested project.73 According to the complaint, this allowed Trendsetter to

enforce its patent rights by requiring C-Innovation to renew the license every time it had a new

prospect for hydrate-remediation work. In this way, Trendsetter purposefully directed its activities

at C-Innovation in the forum state, and C-Innovation’s declaratory-judgment claims for patent

invalidity, unenforceability, and noninfringement arise out of or are related to these activities.

In addition, C-Innovation alleges that “the ’785 Patent does not accurately identify the true

inventors of the claimed invention,” and that “the ’785 Patent includes drawings that were

plagiarized from persons who are omitted as inventors.”74 C-Innovation thus seeks to invalidate

the ’785 Patent on the ground that Trendsetter only became aware of the method it claims by means

of the 2015 Project’s technical reports and schematic drawings shared at the 2016 meetings in

72 R. Doc. 14 at 12-13.

73 R. Doc. 14-12 at 2-3.

74 R. Doc. 14 at 2; see also id. at 17-18 (“The claims of the ’785 Patent, including Claim 1, are invalid under

35 U.S.C. §§ 101 and 115(a) for failure to name the true inventors.”).

14

Louisiana. Louisiana, then, was the situs for the wrongful conduct from which all of C-

Innovation’s patent claims against Trendsetter flow, and Trendsetter’s defense of the ’785 Patent

essentially begins there. See, e.g., Cray, Inc. v. Raytheon Co., 179 F. Supp. 3d 977, 980-81 (W.D.

Wash. 2016) (holding specific jurisdiction existed on correction of inventorship claim where

defendant-patentee filed patent applications relying on information acquired from plaintiff located

in the forum state).

In sum, Trendsetter’s activities concerning enforcement and defense of its patent, including

its alleged misappropriation of the hydrate-remediation method, its litigation threats, the

negotiation and execution of the License Agreement for a Louisiana project, and the agreement’s

continuing obligations between Trendsetter in Texas and C-Innovation in Louisiana to approve the

license for each new project, provide sufficient minimum contacts with Louisiana to support

specific personal jurisdiction.

b. Asserting personal jurisdiction over Trendsetter will not offend traditional

notions of fair play and substantial justice.

“The inquiry under the reasonableness prong (step two) is not limited to the specific facts

giving rise to, or relating to, the particular litigation. ‘Once it has been decided that a defendant

purposefully established minimum contacts within the forum State, these contacts may be

considered in light of other factors to determine whether the assertion of personal jurisdiction

would comport with “fair play and substantial justice.”’” Xilinx, 848 F.3d at 1355 (quoting Burger

King, 471 U.S. at 476) (emphasis in original). These “other factors” must be analyzed by “looking

to circumstances beyond those that give rise or relate to the specific lawsuit.” Id. The defendant

must show a “‘compelling case’ under Burger King that jurisdiction is unreasonable.” Id. at 1356

(quoting Burger King, 471 U.S. at 477). Thus, on the one hand, at this stage of the inquiry, warning

15

or enforcement letters are not enough. Id. at 1357.75 But, on the other hand, “defeats of otherwise

constitutional personal jurisdiction are limited to the rare situation in which the plaintiff’s interest

and the state’s interest in adjudicating the dispute in the forum are so attenuated that they are

clearly outweighed by the burden of subjecting the defendant to litigation within the forum.”

Campbell Pet, 542 F.3d at 885 (quotation marks omitted; emphasis added). In this reasonableness

inquiry, the court considers “(1) the burden on the defendant, (2) the interests of the forum state,

(3) the plaintiff’s interest in obtaining relief, (4) the interstate judicial system’s interest in obtaining

the most efficient resolution of controversies, and (5) the shared interest of the several states in

furthering fundamental substantive social policies.” Id. (quoting Elecs. for Imaging, 340 F.3d at

1351-52).

This case does not present the rare situation where the defendant would be unduly burdened

by litigating in this forum. Trendsetter argues that subjecting it to a patent action here “violates

the principles of fair play and substantial justice because it would be inconvenient, unreasonable

and unfair.”76 Even if proceeding in Louisiana will be inconvenient for Trendsetter, as it asserts,

this inconvenience does not meet the high standard required. Trendsetter regularly conducts

business both internationally and domestically, including in Louisiana, so its burden is hardly

75 See also Maxchief, 909 F.3d at 1139 (holding that sending notice letters of patent infringement “does not

satisfy the ‘fair play and substantial justice’ prong of the personal jurisdiction inquiry, because principles of fair play

‘afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a

foreign forum’”); New World Int’l, 859 F.3d at 1037-38 (“Under the third part of the test, however, this court has held

that it is improper to predicate personal jurisdiction on the act of sending ordinary cease and desist letters into a forum,

without more.”); Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1202 (Fed. Cir. 2003) (“We have decided

that under the third of these tests the sending of letters threatening infringement litigation is not sufficient to confer

personal jurisdiction.”).

76 R. Doc. 11-1 at 19-20. Trendsetter argues it is unreasonable because it “(1) places an extraordinary burden

on Trendsetter, (2) Texas’ interests in the matter far exceed Louisiana since both [Trendsetter] and [C-Innovation]

operate their respective business out of Houston and perform work for Houston based third party companies, 3) [C-

Innovation’s] interest in securing relief is greater in Houston where it operates, and 4) judicial resolution of any

controversy would be most efficiently undertaken in Houston where all apparent witness [sic] reside.” Id. at 20.

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“extraordinary” as it claims. The state of Louisiana has an interest in this patent dispute to the

extent it may affect oil-and-gas projects in or mobilized from the state. Further, C-Innovation, as

a Louisiana company, has an interest in obtaining relief in Louisiana, especially since the project

requiring the license was launched from this state and uses a method C-Innovation alleges was

misappropriated by Trendsetter at a meeting in the state. Therefore, this is not a case “in which

the plaintiff’s interest and the state’s interest in adjudicating the dispute in the forum are so

attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation

within the forum.” Campbell Pet, 542 F.3d at 885. Moreover, resolution of a patent dispute can

be obtained as efficiently in this Court as a Texas federal court (although it may be less convenient

for most witnesses), and both Louisiana and Texas share the same interest in furthering the

substantive social policies underlying the federal patent law applicable to this dispute. Having

determined that this Court has specific personal jurisdiction over Trendsetter, the Court now

considers the second question raised by Trendsetter’s motion, namely, whether there is a case or

controversy.

B. Case or Controversy

1. Rule 12(b)(6) standard

The Federal Rules of Civil Procedure require a complaint to contain “a short and plain

statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Rule

8 “does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-

defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The statement of the claim must

“‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’”

Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). A pleading does

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not comply with Rule 8 if it offers “labels and conclusions,” “a formulaic recitation of the elements

of a cause of action,” or “‘naked assertions’ devoid of ‘further factual enhancement.’” Iqbal, 556

U.S. at 678 (quoting Twombly, 550 U.S. at 555, 557) (alteration omitted). The Federal Circuit

reviews motions to dismiss “under the law of the regional circuit.” Boom! Payments, Inc. v. Stripe,

Inc., 2021 WL 116545, at *3 (Fed. Cir. 2021) (citing OIP Techs., Inc. v. Amazon.com, Inc., 788

F.3d 1359, 1362 (Fed. Cir. 2015)); see also Simio, LLC v. Flexsim Software Prods., Inc., 983 F.3d

1353, 1358 (Fed. Cir. 2020).

Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a party to move to dismiss

for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). “To

survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true,

to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly,

550 U.S. at 570). A claim is plausible on the face of the complaint “when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). Plausibility does not equate to

probability, but rather “it asks for more than a sheer possibility that a defendant has acted

unlawfully.” Id. (citing Twombly, 550 U.S. at 556). “Where a complaint pleads facts that are

‘merely consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and

plausibility of “entitlement to relief.”’” Id. (quoting Twombly, 550 U.S. at 557). Thus, if the facts

pleaded in the complaint “do not permit the court to infer more than the mere possibility of

misconduct, the complaint has alleged – but it has not ‘shown’ – ‘that the pleader is entitled to

relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)) (alteration omitted).

In considering a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court employs

the two-pronged approach utilized in Twombly. The court “can choose to begin by identifying

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pleadings that, because they are no more than conclusions [unsupported by factual allegations],

are not entitled to the assumption of truth.” Iqbal, 556 U.S. at 679. However, “[w]hen there are

well-pleaded factual allegations, a court should assume their veracity and then determine whether

they plausibly give rise to an entitlement to relief.” Id. “[The] task, then, is to determine whether

the plaintiff has stated a legally cognizable claim that is plausible, not to evaluate the plaintiff’s

likelihood of success.” Body by Cook, Inc. v. State Farm Mut. Auto. Ins., 869 F.3d 381, 385 (5th

Cir. 2017) (quoting Doe ex rel. Magee v. Covington Cty. Sch. Dist., 675 F.3d 849, 854 (5th Cir.

2012)). Motions to dismiss are disfavored and rarely granted. Turner v. Pleasant, 663 F.3d 770,

775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir.

2009)).

A court’s review of a Rule 12(b)(6) motion to dismiss “is limited to the complaint, any

documents attached to the complaint, and any documents attached to the motion to dismiss that

are central to the claim and referenced by the complaint.” Lone Star Fund V (U.S.), L.P. v.

Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (citing Collins v. Morgan Stanley Dean

Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)). A court may also take judicial notice of certain

matters, including public records and government websites. Dorsey v. Portfolio Equities, Inc., 540

F.3d 333, 338 (5th Cir. 2008); see also Kitty Hawk Aircargo, Inc. v. Chao, 418 F.3d 453, 457 (5th

Cir. 2005). Thus, in weighing a Rule 12(b)(6) motion, district courts primarily look to the

allegations found in the complaint, but courts may also consider “documents incorporated into the

complaint by reference or integral to the claim, items subject to judicial notice, matters of public

record, orders, items appearing in the record of the case, and exhibits attached to the complaint

whose authenticity is unquestioned.” Meyers v. Textron, Inc., 540 F. App’x 408, 409 (5th Cir.

2013) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).

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2. C-Innovation has presented a case or controversy ripe for adjudication under

the Declaratory Judgment Act.

The Declaratory Judgment Act allows a court to “declare the rights and other legal relations

of any interested party seeking such declaration, whether or not further relief is or could be sought.”

28 U.S.C. § 2201(a). “‘Basically, the question in each case is whether the facts alleged, under all

the circumstances, show that there is a substantial controversy, between parties having adverse

legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory

judgment.’” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007) (quoting Md. Cas.

Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). In patent cases, “the nature of the claim

in a declaratory judgment action is ‘to clear the air of infringement charges.’” Avocent, 552 F.3d

at 1332 (quoting Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1360 (Fed.

Cir. 1998)).

A party does not have to put itself in danger of infringing a patent in order to question its

validity. The Supreme Court has held that a party is “not required, insofar as Article III is

concerned, to break or terminate its … license agreement before seeking a declaratory judgment

in federal court that the underlying patent is invalid, unenforceable, or not infringed.”

MedImmune, Inc., 549 U.S. at 137. Here, C-Innovation and its client received communications

from Trendsetter which they interpreted as threats of litigation to enforce the ’785 Patent. As a

result, C-Innovation was allegedly compelled to enter into the License Agreement for the project

with that client. In other words, “the threat-eliminating behavior [i.e., the License Agreement] was

effectively coerced.” Id. at 129. Since then C-Innovation has felt increasingly constrained by the

License Agreement and has now terminated the agreement, asserting that it “does not intend to

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make any substantial changes to its hydrate remediation process for future projects.”77 Therefore,

the hydrate-remediation projects C-Innovation will undertake in the future present the same

potential for litigation over the patent as did the project that led Trendsetter to threaten litigation

over its patent in the first place.

Trendsetter argues that “there exists no definite and concrete dispute sufficient to confer

standing under the Declaratory Judgment Act”78 because the “facts pled in this case lack any

evidence of the immediacy and reality required to support DJ jurisdiction.”79 Specifically,

Trendsetter says C-Innovation’s claims are not ripe for adjudication because it points to no

hydrate-remediation projects that are concrete. This argument ignores C-Innovation’s history

(some of which is expressly pleaded) of landing and performing such projects. C-Innovation is

not a start-up business, nor does its hydrate-remediation services employ an untested method. This

history, including notably the parties’ own entry into a license agreement anticipating future

projects, entails meaningful preparations and C-Innovation’s concrete intention to use the hydrate-

remediation method in dispute. The complaint calls for no mere advisory opinion.

In its reply, Trendsetter points to a covenant not to sue it has proposed, arguing that the

covenant moots the alleged controversy. A party cannot simply disclaim their prior behavior in

order to avoid litigation not of its choosing. “Given this concern, our cases have explained that ‘a

defendant claiming that its voluntary compliance moots a case bears the formidable burden of

showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be

expected to recur.’” Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013) (quoting Friends of the

Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 190 (2000)). The burden falls on

77 R. Doc. 14 at 14.

78 R. Doc. 11-1 at 24.

79 R. Doc. 20 at 6.

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the party issuing the covenant “to show that it ‘could not reasonably be expected’ to resume its

enforcement efforts against” the other party. Id. at 92 (quoting Friends of the Earth, 528 U.S. at

190). In Already, the Supreme Court held that a case was moot when defendant Nike, Inc.’s

covenant not to sue was “unconditional and irrevocable” and plaintiff Already, LLC could not

demonstrate “that it engages in or has sufficiently concrete plans to engage in activities not covered

by the covenant.” Id. at 93-94. Basically, “whether a covenant not to sue will divest the trial court

of jurisdiction depends on what is covered by the covenant.” Id. at 101 (alteration omitted). Nike

had covenanted not to sue for past, present, and future colorable imitations of Already’s existing

shoe lines (including those Nike had previously claimed infringed its trademark). Id. at 93. In

explaining the determinative breadth of Nike’s covenant, the Supreme Court whimsically observed

that the hypothetical shoe not covered must be sitting “on a shelf between Dorothy’s ruby slippers

and Perseus’s winged sandals.” Id. at 94.

The covenant in this case is not nearly as broad. Trendsetter promises not to sue C-

Innovation only if it uses the method for flow-line hydrate remediation covered in U.S. Patent No.

10,344,549, which describes the method employed in the 2015 Project.80 The last time C-

Innovation planned to use this method, though, Trendsetter allegedly threatened C-Innovation and

its client with litigation and C-Innovation ended up paying royalties to Trendsetter on the basis of

its ’785 Patent. It is not unreasonable, then, for C-Innovation to observe that “Trendsetter views

the remediation method practiced by C-Innovation as infringing its patent,”81 even if C-Innovation

does not share this view. Given this history, the covenant not to sue cannot satisfy Trendsetter’s

burden to show that it could not reasonably be expected to resume its enforcement efforts against

80 R. Doc. 17-3 at 2.

81 R. Doc. 16 at 9 (citing R. Docs. 14 at 12; 16-1 at 5-6); see also R. Doc. 14 at 2 (“Trendsetter refuses to

concede … that the services offered by C-Innovation do not infringe the ’785 Patent.”).

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C-Innovation. Because the dispute between the parties turns on what is covered by the respective

patents, Trendsetter’s promise does little to move this case closer to resolution. Said another way,

for Trendsetter’s covenant to have had the same result as Nike’s in Already, it should have

promised not to sue for past or future use of any system using the method covered by the ’785

Patent. This Trendsetter most assuredly did not do.

IV. CONCLUSION

Accordingly, for the foregoing reasons,

IT IS ORDERED that the motions of defendant Trendsetter Engineering, Inc. to dismiss

for lack of personal jurisdiction and/or case or controversy (R. Docs. 11 & 21) are DENIED.

New Orleans, Louisiana, this 26th day of January, 2020.

________________________________

BARRY W. ASHE

UNITED STATES DISTRICT JUDGE

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